Market Commentary 01/11/16

EUR/USD – Moving Into 1 Hour Supply Zone

Today EUR/USD has made a large move higher which has pushed the market up to the supply zone where I said to watch for signs of a reversal in yesterday’s post.

aviary-photo_131224869787755515Currently the market hasn’t given us any signs a reversal might be taking place but that could change when the market pushes deeper into the supply zone. Ideally what you want to see is either a large bearish engulfing candle form when the market is in the zone, or a sharp drop out of the zone consisting of one or two bearish large range candlesticks. If the market falls out of the zone in a weak fashion, i.e with a combination of tiny bearish and bullish candlesticks which don’t cause any significant down-movement to take place, be prepared for the market to break through the zone as the drop is likely to be from the bank traders taking profits off buy trades placed earlier on in the move up.

 

USD/JPY – Falling Back Towards Buy Zone

With both EUR/USD and AUD/USD moving higher today, USD/JPY has fallen lower and is now close to entering the buy zone which caused the previous move higher to take place.

aviary-photo_131224874462663011Yesterday’s move higher terminated not long after my market commentary was published, it didn’t reach the supply zone created by the large drop, but it has created a sell zone which we can use to look for entries short if the market returns is able to return to it after hitting the buy zone. I think overall we are going to see the market continue to drop over the next few weeks, I do still feel like the market is heading towards the daily supply zone seen at the 106.000 level I just think a move down back to the daily demand zone at the 104.000 level will occur before that happens.

For now keep an eye on the sell zone created by today’s drop. If the market hits the buy zone it’s likely to bounce back up into either the supply zone seen at the top of the image or the sell zone created today, we’ll have to let the price action determine which zone is going to cause the market to reverse so be on the watch for bearish engulfing candles to form when the market enters either one of the zones.

 

AUD/USD – Falling Out Of Daily Sell Zone

Last night we saw a large move higher take place after the RBA rate announcement came out as being positive for AUD. The move higher caused the market to move into the daily sell zone and currently we are seeing the market move back out of this zone once again.

aviary-photo_131224887045984995The supply zone which the market was reacting to yesterday was broken when the RBA made their rate announcement. I don’t believe this move higher changes anything in terms of the long-term outlook of the market. I still think AUD/USD is going to end up falling through the buy zone seen right at the bottom of the image within the next couple of weeks.

The supply zone created today marked with black lines is valid for trading so long as we see the market continue to drop down to around the point where I’ve marked the black line. If it drops down to here I’ll have more confidence trading the zone as it’s more likely to have been created by the bank traders placing sell trades than it is them taking profits off buy trades placed sometime before the large move higher began so only watch for bearish engulfs if the price drops down to the black line.

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